A pair of turnpike revenue offerings from New Jersey and Pennsylvania will give the primary market a lift this week, helping alleviate supply concerns ahead of spring reinvestment season, municipal experts said.
According to Ipreo LLC and The Bond Buyer, new long-term volume is estimated to inch up to $5.14 billion - headlined by a $1 billion New Jersey Turnpike Authority revenue sale on Tuesday. That is up from last week's revised $4.95 billion as reported by Thomson Reuters.
"We still have a very small calendar, but this is exactly what the market needs," said Howard Mackey, vice chairman of Rice Financial.
"I think depending on the pricing, this ought to be a well sought after transaction," he said of the New Jersey deal. "There is a substantial amount of pent-up demand for an issue like this."
The deal's size and its timing will also serve as selling points, just before the start of the June and July reinvestment season, Mackey said. "If it settles in June there will probably be a fair amount of demand due to the expected coupon payments coming due in June."
The New Jersey turnpike deal, which is rated A3 by Moody's Investors Service, A-plus by Standard & Poor's, and A by Fitch Ratings, is slated for pricing by Goldman, Sachs & Co. on Tuesday.
"A large liquid name like New Jersey Turnpike has specialty state appeal, but it's large enough to have national buyers," and will be a good match for institutional and retail accounts, Mackey said.
A $514 million sale from the Pennsylvania Turnpike Commission is also gearing up for pricing on Tuesday by Citigroup Global Markets Inc.
The variable-rate turnpike revenue bonds be linked to the Securities Industry & Financial Markets Association floating-rate index and will consist of a serial structure maturing from 2015 to 2021.
The bonds will be sold as 2014 Series B and Series B-1 and will be rated A1 by Moody's, and A-plus by both Standard & Poor's and Fitch.
In the airport sector, the Metropolitan Washington Airports Authority will land a $450 million sale of Dulles Toll Road second senior revenue refunding bonds in the market on Wednesday.
The deal will be structured as a single term bond maturing in 2053 and is rated Baa1 by Moody's and BBB-plus by Standard & Poor's.
The supply improvement comes on the heels of a week-long rally as municipals gained for a fourth straight day on Friday morning. Yields for bonds maturing in two years, and from nine to 12 years, dropped by as much as two basis points, according to Municipal Market Data's triple-A scale.
The largest deal of the past week, an Illinois State Toll Highway Authority sale of revenue bonds, was increased to $500 million from a scheduled $450 million.
Rated Aa3 by Moody's and AA-minus by the two Standard & Poor's and Fitch Ratings, the deal's final maturity in 2039 was priced with a 5% coupon with a 3.89% yield - which was 53 basis points higher in yield than the triple-A general obligation scale at the time of the pricing.
In the coming week, the Curators of the University of Missouri are planning to sell $289.13 million of system facilities revenue bonds on Tuesday in a negotiated deal led by senior book-runner Morgan Stanley & Co. Rated Aa1 by Moody's and AA-plus by S&P, the deal is expected to consist of a serial and term structure. Details on the maturities were still being hammered out on Friday afternoon.
